A time of extreme volatility, both up and down, may cause you to not look at your 401k out of fear. What is driving your hesitation?
CNN Business reported that the average 401k shrank by $91,400 in the first quarter of 2020. That’s a 19% drop from the previous quarter. Fortunately, shortly thereafter the market largely regained those losses. Maybe your concern comes from a different question. Here’s my suggestion: Look at where your 401k is and ask yourself, Do I really have a plan, or am I just letting my account drift in whatever direction the market is going?
With employers laying off employees, cutting incomes, and decreasing matching contributions it may be time to reassess your overall investment objectives. Things to re-examine are your contribution levels, risk tolerance, time horizon, and asset allocation. The market has changed the investments of choice from just a year ago and may have altered your target/investment strategy. Due to this fact, your investments may be out of balance and may require rebalancing. If one chooses to not rebalance it may have a significant impact on risk and return moving you further away from your investment/retirement objectives.
If you are fortunate enough to still be employed staying at home and saving more due to the quarantine you may want to up your contribution to your 401k as well as your other investment accounts. One of the additional advantages of the quarantine is you have more time to think and plan. Now is the time to ask yourself do I really have a plan in place to increase my 401k and other investments? History shows us that those with a plan and investment strategy are more likely to have a rewarding retirement.
*Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance is no guarantee of future results. Please note that individual situations can vary. Therefore, the information presented here should only be relied upon when coordinated with individual professional advice.
Securities and Investment Advisory Services offered through Woodbury Financial Services, Inc., Member FINRA, SIPC, and Registered Investment Advisor. The Henne Financial Group, LLC and Woodbury Financial Services, Inc. are not affiliated entities.